In order to understand the requirement for compliance with the Goods and Services Tax Act (the Act), it is imperative to assess whether GST registration is required or not.
By Tanvi Loond
All supplies of goods or services or both attract Goods and Services Tax (GST) at specified rates. In order to understand the requirement for compliance with the Goods and Services Tax Act (the Act), it is imperative to assess whether GST registration is required or not. This is an important step because once the business is registered, GST returns must be filed mandatorily even if there is no business activity.
An application for GST registration is made online on the GST portal (www.gst.gov.in) run by The Goods and Services Tax Network (GSTN). The registration form GST REG-01 requires key data like Permanent Account Number (PAN), Business Constitution, Aadhaar, incorporation documents etc. This data automatically validated by the GST Portal with the respective agency i.e. tax authorities, Ministry of Corporate Affairs etc. The application data along with supporting scanned documents is sent by GSTN to states/ Centre, which in turn may send a query, an approval or rejection intimation. If approved, the applicant receives a digitally signed registration to GSTN. Registration is state /union territory specific i.e. if a supply is made from a different state or union territory, separate registration is required.
As per section 22(1) of the CGST Act, every supplier shall be liable to be registered in the State or Union Territory from where he/ she makes taxable supplies of goods or services or both, if his/her aggregate turnover in a financial year exceeds the following limits:
Aggregate turnover — Rs 10 lakh — In case of supply from any of the Specified Special Category States
Aggregate turnover — Rs 20 lakh — In all other cases
The following persons are exempt from GST registration:
Goods or services exempt from tax — Section 23(1)(a) of the CGST Act exempts persons engaged exclusively in the business of supplying goods or services or both that are not liable to pay tax or are wholly exempt from tax. Examples of supplies not liable to tax in GST are:
- Alcoholic liquor for human consumption
- Specified petroleum products i.e. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel
Examples of supplies wholly exempt from tax in GST are:
- Sale or purchase of agricultural produce
- Providing medical services
Supplier of goods up to an aggregate turnover of Rs. 40 lakh — Any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed Rs. 40 lakh is exempt from registering under the GST regime as per Notification No. 10/2019-Central Tax dated 7 th March 2019. However, this exemption shall not apply to:
- Persons required to take compulsory registration under section 24.
- Persons engaged in making supplies of specified goods such as Ice cream and other edible ice, whether or not containing cocoa. Pan masala, Tobacco and manufactured tobacco substitutes.
- Persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand.
- Persons exercising option under the provisions of sub-section (3) of section 25, or such registered persons who intend to continue with their registration under the said Act.
Agriculturist means an individual or Hindu Undivided Family (HUF) who undertakes cultivation of land by own labour, or labour of the family, or by servants on wages payable in cash or kind or by hired labour under personal supervision or the supervision of any family member.
Supplier of handicrafts
As you will note under compulsory registration mentioned below, persons making any inter-state taxable supply of goods are required to register under GST irrespective of their aggregate turnover. However, casual taxable persons making inter-state supply of handicraft goods are exempt subject to the condition that the aggregate turnover is less than Rs 20 lakh (Rs 10 lakh in case of Specified Special Category States).
Service provider through Electronic commerce operators
Persons making taxable supply of services through an Electronic commerce operator (ECO) who is required to collect tax at source under section 52 are exempted from obtaining GST registration if their aggregate turnover is less than Rs. 20 lakh (Rs. 10 lakh in case of Specified Special Category States).
Service provider making inter-state supply
Persons making inter-state taxable supply of services are exempted from obtaining GST registration if their aggregate turnover is less than Rs. 20 lakh (Rs. 10 lakh in case of Specified Special Category States).
Job workers making inter-state supply
Job workers making inter-state supply of services to registered person are exempt. However, the following job workers shall be required to obtain registration: A job worker, being a supplier of services, whose turnover exceeds the threshold limit; and a job worker involved in making supply of services in relation to jewelry, goldsmiths and
- All persons making any inter-state taxable supply of goods or services and goods. However, abovementioned exemptions have been provided to this rule.
- Casual taxable person making taxable supply should obtain GST registration. A casual taxable person means a person who occasionally undertakes transactions involving supply of goods or services or both in a state or union territory which is not the fixed place of business.
- Persons required to pay tax under Reverse Charge.
- Electronic commerce operators (ECO) are liable to obtain GST registration irrespective of the value of supply.
- Persons supplying goods or services or both through ECOs which are required to collect tax at source under section 52 of the CGST Act.
- Non-resident taxable person (i.e. a who has no fixed place of business or residence in India) making taxable supply. Non-resident taxable person means a person who occasionally undertakes transactions, whether as principal or agent, but has no fixed place of business. For example, a company incorporated outside India comes to Participate at an exhibition in Delhi and makes a taxable supply.
- Persons required to deduct tax under section 51 (TDS).
- Persons who supply goods or services on behalf of other taxable persons whether as an agent or otherwise.
- Input service distributors are required to mandatorily seek GST registration. An Input service distributor means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the credit of central, state, union territory or integrated tax paid on the said services to a supplier having the same PAN as that of the said office.
- Persons supplying Online information and database access or retrieval services (OIDAR) from a place outside India to a person in India.
- Such other persons as may be notified by the Central or State Government
Tanvi Loond is Founder and CEO, Insta C.A., an online tax and accounting service for SMEs and startups.